Top 5 Reasons You Need a Financial Advisor

I’m often asked if it’s really necessary to work with a financial advisor- yes, there are people who ask financial advisors if it’s necessary to work with financial advisors! In short, generally, the answer is… a resounding and unbiased “Yes!” And here’s why.

While there are many quantifiable reasons, there are also many non-monetary factors. Like an accountant, lawyer and other professions, the difference between you and a professional financial advisor (investment advisor, wealth manager, etc) is typically just knowledge- and perhaps a strange interest in reading through financial publications. Sure, we have licenses and certifications but that’s all based on learning. It’s not like the best financial advisors have a particular set of skills like Liam Neeson, or went to years of schooling to learn how to hold a scalpel. Much of the value we bring to our clients is in our specific knowledge set. With that in mind, here’s a list of the top 5 reasons you should consider working with a financial advisor:

Time

This is the #1 reason to work with a financial advisor. You could easily spend 9 hours looking through the web finding the reasons why you should not roll over your 401K to an IRA, or how much international exposure you should have in your portfolio, or you could hire someone. We believe in hiring professionals like lawyers and accountants, the knowledge we could get on our own if we had the time, but why?  They’re the experts!

Discipline

According to a multi-decade study by Dalbar, a research firm, “investor results are more dependent on investor behavior than on fund performance.” Study after study shows investors underperform their respective benchmarks by at least 3% (300 basis points) annually, and almost all of this loss can be attributed to emotion. 3% per year over a 30 year period is…A LOT. A good financial advisor should be able to help control your case of emotional investing.

Better Decisions

This is where advisor expertise comes in. In a 2013 study done by Morningstar, they found that merely by helping clients make better financial decisions, a good advisor can add over 1.8% in annual returns for their clients.  Specifically, the primary topics they evaluated were: tax efficiency of investments and withdrawals, dynamic withdrawal strategies, asset allocation (including non-investment-specific allocations), efficiently incorporating guaranteed income and asset allocation based on future expectations of spending.  We know there’s some jargon there, but if you’re completely confused on any of those, it may be worth calling an advisor!

Accountability

Not everyone needs someone to join them on their financial journey, but most people reach a point where they want that motivation and clarity that comes with an expert riding next to you. It may not be absolutely necessary, but it’s certainly nice to have someone to call when you just need a little extra support, answers to a question or want to be told to “put down that latte!”

Peace of Mind

Confidence knowing that your financial “I”s are dotted and investment “T”s  are crossed is comforting.  Knowing there’s a plan in place to help you reach your financial goals is even better.  Create a financial plan, get on the road to following the financial plan, update it as needed and get excited about your financial future!  After all, are you sure you were supposed to (insert your most recent financial decision here).  Right.  Next time, have confidence you’re on the right path.